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Unpaid losses and loss expenses
12 Months Ended
Dec. 31, 2017
Liability for Claims and Claims Adjustment Expense [Abstract]  
Unpaid Losses and Loss Expenses
Unpaid losses and loss expenses

Chubb establishes reserves for the estimated unpaid ultimate liability for losses and loss expenses under the terms of its policies and agreements. Reserves include estimates for both claims that have been reported and for IBNR claims, and include estimates of expenses associated with processing and settling these claims. Reserves are recorded in Unpaid losses and loss expenses in the consolidated balance sheets. While we believe that our reserves for unpaid losses and loss expenses at December 31, 2017 are adequate, new information or trends may lead to future developments in incurred loss and loss expenses significantly greater or less than the reserves provided. Any such revisions could result in future changes in estimates of losses or reinsurance recoverable and would be reflected in our results of operations in the period in which the estimates are changed.
The following table presents a reconciliation of Unpaid losses and loss expenses:
 
Year Ended December 31
 
(in millions of U.S. dollars)
2017

2016
 
2015
 
Gross unpaid losses and loss expenses, beginning of year
$
60,540

 
$
37,303

 
$
38,315

Reinsurance recoverable on unpaid losses (1)
(12,708
)
 
(10,741
)
 
(11,307
)
Net unpaid losses and loss expenses, beginning of year
47,832

 
26,562

 
27,008

Acquisition of subsidiaries

 
21,402

 
417

Total
47,832

 
47,964

 
27,425

Net losses and loss expenses incurred in respect of losses occurring in:
 
 
 
 
 
Current year
19,391

 
17,256

 
10,030

Prior years (2)
(937
)
 
(1,204
)
 
(546
)
Total
18,454

 
16,052

 
9,484

Net losses and loss expenses paid in respect of losses occurring in:
 
 
 
 
 
Current year
6,575

 
5,899

 
4,053

Prior years
10,873

 
9,816

 
5,612

Total
17,448

 
15,715

 
9,665

Foreign currency revaluation and other
327

 
(469
)
 
(682
)
Net unpaid losses and loss expenses, end of year
49,165

 
47,832

 
26,562

Reinsurance recoverable on unpaid losses (1)
14,014

 
12,708

 
10,741

Gross unpaid losses and loss expenses, end of year
$
63,179

 
$
60,540

 
$
37,303

(1) Net of provision for uncollectible reinsurance.
(2) Relates to prior period loss reserve development only and excludes prior period development related to reinstatement premiums, expense adjustments, and earned premiums totaling $108 million, $69 million, and nil, for 2017, 2016, and 2015, respectively.

The increase in gross and net unpaid losses and loss expenses in 2017 primarily reflects the significant catastrophe events, principally from California wildfires, hurricanes Harvey, Irma, and Maria and the earthquakes in Mexico. The increase in gross and net unpaid losses and loss expenses in 2016 reflects the acquisition of Chubb Corp.

The loss development tables under section c) below, present Chubb’s historical incurred and paid claims development by broad product line through December 31, 2017, net of reinsurance, as well as the cumulative number of reported claims, IBNR balances, and other supplementary information.

The following table presents a reconciliation of the loss development tables to the liability for unpaid losses and loss expenses in the consolidated balance sheet:
Reconciliation of Reserve Balances to Liability for Unpaid Loss and Loss Expenses
(in millions of U.S. dollars)
 
December 31, 2017

Presented in the loss development tables:
 
 
  North America Commercial P&C Insurance — Workers' Compensation
 
$
8,873

  North America Commercial P&C Insurance — Liability
 
16,631

  North America Commercial P&C Insurance — Other Casualty
 
1,789

  North America Commercial P&C Insurance — Non-Casualty
 
2,398

  North America Personal P&C Insurance
 
2,421

  Overseas General Insurance — Casualty
 
6,026

  Overseas General Insurance — Non-Casualty
 
2,549

  Global Reinsurance — Casualty
 
1,340

  Global Reinsurance — Non-Casualty
 
371

Excluded from the loss development tables:
 
 
  Other
 
4,302

Net unpaid loss and allocated loss adjustment expense
 
46,700

Ceded unpaid loss and allocated loss adjustment expense:
 
 
  North America Commercial P&C Insurance — Workers' Compensation
 
$
1,737

  North America Commercial P&C Insurance — Liability
 
4,133

  North America Commercial P&C Insurance — Other Casualty
 
813

  North America Commercial P&C Insurance — Non-Casualty
 
1,336

  North America Personal P&C Insurance
 
503

  Overseas General Insurance — Casualty
 
2,550

  Overseas General Insurance — Non-Casualty
 
1,269

  Global Reinsurance — Casualty
 
76

  Global Reinsurance — Non-Casualty
 
142

  Other
 
1,628

Ceded unpaid loss and allocated loss adjustment expense
 
14,187

Unpaid loss and loss expense on other than short-duration contracts (1)
 
810

Unpaid unallocated loss adjustment expenses
 
1,482

Unpaid losses and loss expenses
 
$
63,179

(1) Primarily includes the claims reserve of our international A&H business and Life Insurance segment reserves.

Business excluded from the loss development tables
“Other” shown in the reconciliation table above comprises businesses excluded from the loss development tables below:
North America Agricultural Insurance segment business, which is short-tailed with the majority of the liabilities expected to be resolved in the ensuing twelve months;
Corporate segment business, which includes run-off liabilities such as asbestos and environmental and other mass tort exposures and which impact accident years older than those shown in the exhibits below;
Life Insurance segment business, which is generally written using long-duration contracts; and

Certain subsets of our business due to data limitations or unsuitability to the development table presentation, including:
We underwrite loss portfolio transfers at various times; by convention, all premium and losses associated with these transactions are recorded to the policy period of the transaction, even though the accident dates of the claims covered may be a decade or more in the past. We also underwrite certain high attachment, high limit, multiple-line and excess of aggregate coverages for large commercial clients. Changes in incurred loss and cash flow patterns are volatile and sufficiently different from those of typical insureds. This category includes the loss portfolio transfer of Fireman’s Fund personal lines run-off liabilities and Alternative Risk Solutions business within the North America Commercial P&C segment;
2015 and prior paid history on a subset of previously acquired international businesses, within the Overseas General Insurance segment, due to limitations on the data prior to the acquisition;
Reinsurance recoverable bad debt;
Purchase accounting adjustments related to unpaid losses and loss expenses for Chubb Corp.

a) Description of Reserving Methodologies
Our recorded reserves represent management's best estimate of the provision for unpaid claims as of the balance sheet date. Management's best estimate is developed after collaboration with actuarial, underwriting, claims, legal, and finance departments and culminates with the input of reserve committees. Each business unit reserve committee includes the participation of the relevant parties from actuarial, finance, claims, and unit senior management and has the responsibility for finalizing, recommending and approving the estimate to be used as management's best estimate. Reserves are further reviewed by Chubb's Chief Actuary and senior management. The objective of such a process is to determine a single estimate that we believe represents a better estimate than any other and which is viewed by management to be the best estimate of ultimate loss settlements.

This estimate is based on a combination of exposure and experience-based actuarial methods (described below) and other considerations such as claims reviews, reinsurance recovery assumptions and/or input from other knowledgeable parties such as underwriting. Exposure-based methods are most commonly used on relatively immature origin years (i.e., the year in which the losses were incurred — “accident year” or “report year”), while experience-based methods provide a view based on the projection of loss experience that has emerged as of the valuation date. Greater reliance is placed upon experience-based methods as the pool of emerging loss experience grows and where it is deemed sufficiently credible and reliable as the basis for the estimate. In comparing the held reserve for any given origin year to the actuarial projections, judgment is required as to the credibility, uncertainty and inherent limitations of applying actuarial techniques to historical data to project future loss experience. Examples of factors that impact such judgments include, but are not limited to, the following:

nature and complexity of underlying coverage provided and net limits of exposure provided;
segmentation of data to provide sufficient homogeneity and credibility for loss projection methods;
extent of credible internal historical loss data and reliance upon industry information as required;
historical variability of actual loss emergence compared with expected loss emergence;
extent of emerged loss experience relative to the remaining expected period of loss emergence;
rate monitor information for new and renewal business;
facts and circumstances of large claims;
impact of applicable reinsurance recoveries; and
nature and extent of underlying assumptions.

We have actuarial staff within each of our business units who analyze loss reserves (including loss expenses) and regularly project estimates of ultimate losses and the corresponding indications of the required IBNR reserve. Our reserving approach is a comprehensive ground-up process using data at a detailed level that reflects the specific types and coverages of the diverse products written by our various operations. The data presented in this disclosure was prepared on a more aggregated basis and with a focus on changes in incurred loss estimates over time as well as associated cash flows. We note that data prepared on this basis may not demonstrate the full spectrum of characteristics that are evident in the more detailed level studied internally.

We perform an actuarial reserve review for each product line at least once a year. For most product lines, one or more standard actuarial reserving methods may be used to determine estimates of ultimate losses and loss expenses, and from these estimates, a single actuarial central estimate is selected. The actuarial central estimate is an input to the reserve committee process described above. For the few product lines that do not lend themselves to standard actuarial reserving methods, appropriate techniques are applied to produce the actuarial central estimates. For example, run-off asbestos and environmental liability estimates are better suited to the application of account-specific exposure-based analyses to best evaluate their associated aggregate reserve levels.

b) Standard actuarial reserving methods
Standard actuarial reserving methods include, but are not limited to, expected loss ratio, paid and reported loss development, and Bornhuetter-Ferguson methods. A general description of these methods is provided below. In addition to these standard methods, depending upon the product line characteristics and available data, we may use other recognized actuarial methods and approaches. Implicit in the standard actuarial methods that we generally utilize is the need for two fundamental assumptions: first, the pattern by which losses are expected to emerge over time for each origin year, and second the expected loss ratio for each origin year.

The expected loss ratio for any particular origin year is selected after consideration of a number of factors, including historical loss ratios adjusted for rate changes, premium and loss trends, industry benchmarks, the results of policy level loss modeling at the time of underwriting, and/or other more subjective considerations for the product line (e.g., terms and conditions) and external environment as noted above. The expected loss ratio for a given origin year is initially established at the start of the origin year as part of the planning process. This analysis is performed in conjunction with underwriters and management. The expected loss ratio method arrives at an ultimate loss estimate by multiplying the expected ultimate loss ratio by the corresponding premium base. This method is most commonly used as the basis for the actuarial central estimate for immature origin periods on product lines where the actual paid or reported loss experience is not yet deemed sufficiently credible to serve as the principal basis for the selection of ultimate losses. The expected loss ratio for a given origin year may be modified over time if the underlying assumptions differ from the original assumptions (e.g., the assessment of prior year loss ratios, loss trend, rate changes, actual claims, or other information).

Our selected paid and reported development patterns provide a benchmark against which the actual emerging loss experience can be monitored. Where possible, development patterns are selected based on historical loss emergence by origin year. For product lines where the historical data is viewed to have low statistical credibility, the selected development patterns also reflect relevant industry benchmarks and/or experience from similar product lines written elsewhere within Chubb. This most commonly occurs for relatively new product lines that have limited historical data or for high severity/low frequency portfolios where our historical experience exhibits considerable volatility and/or lacks credibility. The paid and reported loss development methods convert the selected loss emergence pattern to a set of multiplicative factors which are then applied to actual paid or reported losses to arrive at an estimate of ultimate losses for each period. Due to their multiplicative nature, the paid and reported loss development methods will leverage differences between actual and expected loss emergence. These methods tend to be utilized for more mature origin periods and for those portfolios where the loss emergence has been relatively consistent over time.

The Bornhuetter-Ferguson method is a combination of the expected loss ratio method and the loss development method, where the loss development method is given more weight as the origin year matures. This approach allows a logical transition between the expected loss ratio method which is generally utilized at earlier maturities and the loss development methods which are typically utilized at later maturities. We usually apply this method using reported loss data although paid data may also be used.

Short-tail business
Short-tail business generally describes product lines for which losses are typically known and paid shortly after the loss actually occurs. This would include, for example, most property, personal accident, and automobile physical damage policies that we write. Due to the short reporting and development pattern for these product lines, the uncertainty associated with our estimate of ultimate losses for any particular accident period diminishes relatively quickly as actual loss experience emerges. We typically assign credibility to methods that incorporate actual loss emergence, such as the paid and reported loss development and Bornhuetter-Ferguson methods, sooner than would be the case for long-tail lines at a similar stage of development for a given origin year. The reserving process for short-tail losses arising from catastrophic events typically involves an assessment by the claims department, in conjunction with underwriters and actuaries, of our exposure and estimated losses immediately following an event and then subsequent revisions of the estimated losses as our insureds provide updated actual loss information.

Long-tail business
Long-tail business describes lines of business for which specific losses may not be known/reported for some period and for which claims can take significant time to settle/close. This includes most casualty lines such as general liability, D&O, and workers' compensation. There are various factors contributing to the uncertainty and volatility of long-tail business. Among these are:

The nature and complexity of underlying coverage provided and net limits of exposure provided;
Our historical loss data and experience is sometimes too immature and lacking in credibility to rely upon for reserving purposes. Where this is the case, in our reserve analysis we may utilize industry loss ratios or industry benchmark development patterns that we believe reflect the nature and coverage of the underwritten business and its future development, where available. For such product lines, actual loss experience may differ from industry loss statistics as well as loss experience for previous underwriting years;
The difficulty in estimating loss trends, claims inflation (e.g., medical and judicial) and underlying economic conditions;
The need for professional judgment to estimate loss development patterns beyond that represented by historical data using supplemental internal or industry data, extrapolation, or a blend of both;
The need to address shifts in mix over time when applying historical paid and reported loss development patterns from older origin years to more recent origin years. For example, changes over time in the processes and procedures for establishing case reserves can distort reported loss development patterns or changes in ceded reinsurance structures by origin year can alter the development of paid and reported losses;
Loss reserve analyses typically require loss or other data be grouped by common characteristics in some manner. If data from two combined lines of business exhibit different characteristics, such as loss payment patterns, the credibility of the reserve estimate could be affected. Additionally, since casualty lines of business can have significant intricacies in the terms and conditions afforded to the insured, there is an inherent risk as to the homogeneity of the underlying data used in performing reserve analyses; and
The applicability of the price change data used to estimate ultimate loss ratios for most recent origin years.

As described above, various factors are considered when determining appropriate data, assumptions, and methods used to establish the loss reserve estimates for long-tail product lines. These factors may also vary by origin year for given product lines. The derivation of loss development patterns from data and the selection of a tail factor to project ultimate losses from actual loss emergence require considerable judgment, particularly with respect to the extent to which historical loss experience is relied upon to support changes in key reserving assumptions.

c) Loss Development Tables
The tables were designed to present business with similar risk characteristics which exhibit like development patterns and generally similar trends, in order to provide insight into the nature, amount, timing and uncertainty of cash flows related to our claims liabilities.

Each table follows a similar format and reflects the following:

The incurred loss triangle includes both reported case reserves and IBNR liabilities.
Both the incurred and paid loss triangles include allocated loss adjustment expense (i.e., defense and investigative costs particular to individual claims) but exclude unallocated loss adjustment expense (i.e., the costs associated with internal claims staff and third-party administrators).
The amounts in both triangles for the years ended December 31, 2008, to December 31, 2016 and average historical claim duration as of December 31, 2017, are presented as supplementary information.
All data presented in the triangles is net of reinsurance recoverables.
The IBNR reserves shown to the right of each incurred loss development exhibit reflect the net IBNR recorded as of December 31, 2017.
The tables are presented retrospectively with respect to acquisitions where these are material and doing so is practicable. Most notably, the Chubb Corp acquisition is presented retrospectively. The unaudited consolidated data is presented solely for informational purposes and is not necessarily indicative of the consolidated data that might have been observed had the transactions been completed prior to the date indicated.

Historical dollar amounts are presented in this footnote on a constant-currency basis, which is achieved by assuming constant foreign exchange rates for all periods in the loss triangles, translating prior period amounts using the same local currency exchange rates as the current year end. The impact of this conversion is to show the change between periods exclusive of the effect of fluctuations in exchange rates, which would otherwise distort the change in incurred loss and cash flow patterns shown. The change in incurred loss shown will differ from other U.S. GAAP disclosures of incurred prior period reserve development amounts, which include the effect of fluctuations in exchanges rates.

We provided guidance above on key assumptions that should be considered when reviewing this disclosure and information relating to how loss reserve estimates are developed. We believe the information provided in the “Loss Development Tables” section of the disclosure is of limited use for independent analysis or application of standard actuarial estimations.

Cumulative Number of Reported Claims
Reported claim counts, on a cumulative basis, are provided to the far right of each paid loss development table. We generally consider a reported claim to be one claim per coverage per claimant. We exclude claims closed without payment. Use of the presented claim counts in analysis of company experience has significant limitations, including:

High deductible workers' compensation claim counts include claims below the applicable policy deductible.
Professional liability and certain other lines have a high proportion of claims reported which will be closed without any payment; shifts in total reported counts may not meaningfully impact reported and ultimate loss experience.
Claims for certain events and/or product lines, such as portions of assumed reinsurance and A&H business, are not reported on an individual basis, but rather in bulk and thus not available for inclusion in this disclosure. For certain A&H business, where bulk reporting affected only the oldest few accident years, presented claim counts for these years were estimated.
Each of the segments below typically has a mixture of primary and excess experience which has shifted over time.

Reported claim counts include open claims which have case reserves and exclude claims that have been incurred but not reported. As such the reported claims are consistent with reported losses, which can be calculated by subtracting incurred but not reported losses from incurred losses. Reported claim counts are inconsistent with losses in the incurred loss triangle, which include incurred but not reported losses, and are also inconsistent with losses in the paid loss triangle, which exclude case reserves.

North America Commercial P&C Insurance — Workers' Compensation — Long-tail
During the year ended December 31, 2017, we refined our loss development groupings based on the similarity of loss payout characteristics. The new groupings were applied consistently to all years presented.

This product line has a substantial geographic spread and a broad mix across industries. Types of coverage include risk management business predominantly with high deductible policies, loss sensitive business (i.e., retrospectively-rated policies), business fronted for captives, as well as excess and primary guaranteed cost coverages.

The triangle below shows all loss and allocated expense development for the workers' compensation product line. In our prior period development disclosure, we exclude any loss development where there is a directly related premium adjustment. For workers' compensation, changes in the exposure base due to payroll audits will drive changes in ultimate losses. In addition, we record involuntary pool assumptions (premiums and losses) on a lagged basis. Both of these items will influence the development in the triangle, particularly the first prior accident year, and are included in the reconciliation table presented on page F-65.

North America Commercial P&C Insurance — Workers' Compensation — Long-tail (continued)
Net Incurred Loss and Allocated Loss Adjustment Expenses
 
 
 
Years Ended December 31
 
 
December 31 2017

(in millions of U.S. dollars)
Unaudited
 
 
 
 
Net IBNR Reserves

Accident Year
2008

 
2009

 
2010

 
2011

 
2012

 
2013

 
2014

 
2015

 
2016

 
2017

 
2017

2008
$
1,084

 
$
1,042

 
$
1,043

 
$
1,037

 
$
1,036

 
$
1,010

 
$
1,009

 
$
1,004

 
$
986

 
$
993

 
$
214

2009
 
 
1,029

 
998

 
997

 
990

 
980

 
977

 
966

 
972

 
965

 
233

2010
 
 
 
 
1,049

 
1,037

 
1,050

 
1,065

 
1,064

 
1,052

 
1,028

 
1,020

 
262

2011
 
 
 
 
 
 
1,037

 
1,030

 
1,046

 
1,049

 
1,053

 
1,022

 
1,012

 
294

2012
 
 
 
 
 
 
 
 
1,050

 
1,011

 
1,030

 
1,040

 
1,011

 
989

 
326

2013
 
 
 
 
 
 
 
 
 
 
1,109

 
1,108

 
1,122

 
1,127

 
1,085

 
368

2014
 
 
 
 
 
 
 
 
 
 
 
 
1,207

 
1,201

 
1,217

 
1,214

 
553

2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,282

 
1,259

 
1,271

 
631

2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,367

 
1,367

 
806

2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,411

 
1,080

Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
11,327

 
 

Net Cumulative Paid Loss and Allocated Loss Adjustment Expenses
 
 
 
Years Ended December 31
 
 
December 31
2017

(in millions of U.S. dollars)
Unaudited
 
 
 
 
Reported Claims
(in thousands)

Accident Year
2008

 
2009

 
2010

 
2011

 
2012

 
2013

 
2014

 
2015

 
2016

 
2017

 
2017

2008
$
124

 
$
275

 
$
371

 
$
439

 
$
503

 
$
546

 
$
578

 
$
607

 
$
632

 
$
651

 
333

2009
 
 
107

 
258

 
348

 
416

 
475

 
519

 
550

 
597

 
617

 
282

2010
 
 
 
 
123

 
300

 
411

 
493

 
551

 
592

 
617

 
641

 
304

2011
 
 
 
 
 
 
119

 
294

 
411

 
484

 
533

 
567

 
595

 
287

2012
 
 
 
 
 
 
 
 
111

 
271

 
365

 
436

 
486

 
532

 
288

2013
 
 
 
 
 
 
 
 
 
 
107

 
286

 
422

 
506

 
553

 
300

2014
 
 
 
 
 
 
 
 
 
 
 
 
113

 
295

 
410

 
484

 
337

2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
116

 
301

 
418

 
339

2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
122

 
326

 
310

2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
120

 
307

Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
4,937

 
 

Net Liabilities for Loss and Allocated Loss Adjustment Expenses
 
 
(in millions of U.S. dollars)
 
December 31, 2017

Accident years prior to 2008
 
$
2,483

All Accident years
 
$
8,873



Supplementary Information: (Favorable)/ Adverse Prior Period Development
 
 
(in millions of U.S. dollars)
 
December 31, 2017

Accident years prior to 2008
 
$
(35
)
All Accident years
 
$
(108
)


North America Commercial P&C Insurance — Workers' Compensation — Long-tail (continued)
Supplementary Information: Average Annual Percentage Payout of Net Incurred Claims by Age, as of December 31, 2017
Age in Years
1

 
2

 
3

 
4

 
5

 
6

 
7

 
8

 
9

 
10

Percentage
10
%
 
16
%
 
10
%
 
7
%
 
5
%
 
4
%
 
3
%
 
3
%
 
2
%
 
2
%


North America Commercial P&C Insurance — Liability — Long-tail
During the year ended December 31, 2017, we refined our loss development groupings based on the similarity of loss payout characteristics. The new groupings were applied consistently to all years presented.

This line consists of primary and excess liability exposures, including medical liability, and professional lines, including directors and officers (D&O) liability, errors and omissions (E&O) liability, employment practices liability (EPL), fidelity bonds, and fiduciary liability.

The primary and excess liability business represents the largest part of these exposures. The former includes both monoline and commercial package liability. The latter includes a substantial proportion of commercial umbrella, excess and high excess business, where loss activity can produce significant volatility in the loss triangles at later ages within an accident year (and sometimes across years) due to the size of the limits afforded and the complex nature of the underlying losses.

This line includes management and professional liability products provided to a wide variety of clients, from national accounts to small firms along with private and not-for-profit organizations, distributed through brokers, agents, wholesalers and MGAs. Many of these coverages, particularly D&O and E&O, are typically written on a claims-made form. While most of the coverages are underwritten on a primary basis, there are significant amounts of excess exposure with large policy limits.
Net Incurred Loss and Allocated Loss Adjustment Expenses
 
 
 
Years Ended December 31
 
 
December 31 2017

(in millions of U.S. dollars)
Unaudited
 
 
 
 
Net IBNR Reserves

Accident Year
2008

 
2009

 
2010

 
2011

 
2012

 
2013

 
2014

 
2015

 
2016

 
2017

 
2017

2008
$
3,792

 
$
3,823

 
$
3,812

 
$
3,791

 
$
3,652

 
$
3,412

 
$
3,352

 
$
3,278

 
$
3,174

 
$
3,157

 
$
245

2009
 
 
3,798

 
3,783

 
3,770

 
3,743

 
3,642

 
3,392

 
3,316

 
3,244

 
3,103

 
250

2010
 
 
 
 
3,578

 
3,583

 
3,601

 
3,559

 
3,419

 
3,250

 
3,128

 
3,107

 
423

2011
 
 
 
 
 
 
3,500

 
3,585

 
3,629

 
3,664

 
3,593

 
3,498

 
3,383

 
589

2012
 
 
 
 
 
 
 
 
3,552

 
3,628

 
3,613

 
3,564

 
3,524

 
3,426

 
856

2013
 
 
 
 
 
 
 
 
 
 
3,546

 
3,541

 
3,542

 
3,532

 
3,430

 
1,090

2014
 
 
 
 
 
 
 
 
 
 
 
 
3,535

 
3,585

 
3,674

 
3,717

 
1,526

2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,559

 
3,708

 
3,818

 
1,941

2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,533

 
3,594

 
2,381

2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,386

 
2,994

Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
34,121

 
 
North America Commercial P&C Insurance — Liability — Long-tail (continued)

Net Cumulative Paid Loss and Allocated Loss Adjustment Expenses
 
 
 
Years Ended December 31
 
 
December 31 2017

(in millions of U.S. dollars)
Unaudited
 
 
 
 
Reported Claims (in thousands)

Accident Year
2008

 
2009

 
2010

 
2011

 
2012

 
2013

 
2014

 
2015

 
2016

 
2017

 
2017

2008
$
147

 
$
580

 
$
1,110

 
$
1,643

 
$
1,992

 
$
2,323

 
$
2,558

 
$
2,657

 
$
2,753

 
$
2,836

 
21

2009
 
 
135

 
587

 
1,160

 
1,672

 
2,019

 
2,357

 
2,545

 
2,678

 
2,730

 
21

2010
 
 
 
 
126

 
611

 
1,108

 
1,559

 
1,893

 
2,259

 
2,426

 
2,527

 
20

2011
 
 
 
 
 
 
160

 
652

 
1,209

 
1,805

 
2,214

 
2,476

 
2,659

 
20

2012
 
 
 
 
 
 
 
 
166

 
656

 
1,172

 
1,680

 
2,092

 
2,326

 
20

2013
 
 
 
 
 
 
 
 
 
 
130

 
548

 
1,192

 
1,597

 
2,007

 
20

2014
 
 
 
 
 
 
 
 
 
 
 
 
164

 
679

 
1,250

 
1,804

 
21

2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
138

 
605

 
1,206

 
23

2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
171

 
663

 
24

2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
161

 
19

Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
18,919

 
 
Net Liabilities for Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)
 
December 31, 2017

Accident years prior to 2008
 
$
1,429

All Accident years
 
$
16,631



Supplementary Information: (Favorable)/ Adverse Prior Period Development


(in millions of U.S. dollars)
 
December 31, 2017

Accident years prior to 2008
 
$
(154
)
All Accident years
 
$
(434
)


Supplementary Information: Average Annual Percentage Payout of Net Incurred Claims by Age, as of December 31, 2017
Age in Years
1

 
2

 
3

 
4

 
5

 
6

 
7

 
8

 
9

 
10

Percentage
4
%
 
14
%
 
17
%
 
15
%
 
12
%
 
9
%
 
6
%
 
4
%
 
2
%
 
3
%



North America Commercial P&C Insurance — Other Casualty — Long-tail
During the year ended December 31, 2017, we refined our loss development groupings based on the similarity of loss payout characteristics. The new groupings were applied consistently to all years presented.

This product line consists of the remaining commercial casualty coverages such as automobile liability and aviation. There is also a small portion of commercial multi-peril (CMP) business in accident years 2014 and prior. The paid and reported data are impacted by some catastrophe loss activity primarily on the CMP exposures just noted.
North America Commercial P&C Insurance — Other-Casualty — Long-tail (continued)

Net Incurred Loss and Allocated Loss Adjustment Expenses
 
 
 
Years Ended December 31
 
 
December 31 2017

(in millions of U.S. dollars)
Unaudited
 
 
 
 
Net IBNR Reserves

Accident Year
2008

 
2009

 
2010

 
2011

 
2012

 
2013

 
2014

 
2015

 
2016

 
2017

 
2017

2008
$
693

 
$
733

 
$
700

 
$
661

 
$
644

 
$
647

 
$
643

 
$
646

 
$
641

 
$
637

 
$
13

2009
 
 
594

 
584

 
550

 
531

 
488

 
454

 
447

 
445

 
441

 
2

2010
 
 
 
 
610

 
604

 
598

 
543

 
503

 
475

 
477

 
489

 
33

2011
 
 
 
 
 
 
577

 
586

 
578

 
545

 
530

 
521

 
513

 
33

2012
 
 
 
 
 
 
 
 
632

 
604

 
575

 
559

 
518

 
517

 
27

2013
 
 
 
 
 
 
 
 
 
 
526

 
530

 
522

 
515

 
468

 
60

2014
 
 
 
 
 
 
 
 
 
 
 
 
592

 
581

 
579

 
594

 
147

2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
486

 
469

 
501

 
191

2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
503

 
494

 
249

2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
531

 
387

Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
5,185

 
 
Net Cumulative Paid Loss and Allocated Loss Adjustment Expenses
 
 
 
Years Ended December 31
 
 
December 31 2017

(in millions of U.S. dollars)
Unaudited
 
 
 
 
Reported Claims (in thousands)

Accident Year
2008

 
2009

 
2010

 
2011

 
2012

 
2013

 
2014

 
2015

 
2016

 
2017

 
2017

2008
$
144

 
$
342

 
$
446

 
$
520

 
$
566

 
$
591

 
$
602

 
$
610

 
$
618

 
$
617

 
20

2009
 
 
70

 
206

 
287

 
337

 
374

 
402

 
414

 
423

 
428

 
15

2010
 
 
 
 
97

 
236

 
322

 
364

 
392

 
434

 
444

 
449

 
15

2011
 
 
 
 
 
 
86

 
235

 
341

 
400

 
437

 
461

 
466

 
16

2012
 
 
 
 
 
 
 
 
69

 
223

 
319

 
386

 
435

 
470

 
16

2013
 
 
 
 
 
 
 
 
 
 
69

 
197

 
271

 
348

 
385

 
18

2014
 
 
 
 
 
 
 
 
 
 
 
 
80

 
220

 
317

 
391

 
17

2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
47

 
137

 
215

 
15

2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
52

 
146

 
15

2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
66

 
13

Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
3,633

 
 
Net Liabilities for Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)
 
December 31, 2017

Accident years prior to 2008 
 
$
237

All Accident years
 
$
1,789



Supplementary Information: (Favorable)/ Adverse Prior Period Development

(in millions of U.S. dollars)
 
December 31, 2017

Accident years prior to 2008
 
$
14

All Accident years
 
$



North America Commercial P&C Insurance — Other-Casualty — Long-tail (continued)

Supplementary Information: Average Annual Percentage Payout of Net Incurred Claims by Age, as of December 31, 2017
Age in Years
1

 
2

 
3

 
4

 
5

 
6

 
7

 
8

 
9

 
10

Percentage
15
%
 
26
%
 
17
%
 
12
%
 
8
%
 
6
%
 
2
%
 
1
%
 
1
%
 
%



North America Commercial P&C Insurance — Non-Casualty — Short-tail
During the year ended December 31, 2017, we refined our loss development groupings based on the similarity of loss payout characteristics. The new groupings were applied consistently to all years presented.

This product line represents first party commercial product lines that are short-tailed in nature, such as property, inland marine, ocean marine, surety and A&H. There is a wide diversity of products, primary and excess coverages, and policy sizes. During this ten-year period, this product line was also impacted by natural catastrophes mainly in the 2008, 2012, and 2017 accident years.
Net Incurred Loss and Allocated Loss Adjustment Expenses
 
 
 
Years Ended December 31
 
 
December 31 2017

(in millions of U.S. dollars)
Unaudited
 
 
 
 
Net IBNR Reserves

Accident Year
2008

 
2009

 
2010

 
2011

 
2012

 
2013

 
2014

 
2015

 
2016

 
2017

 
2017

2008
$
1,999

 
$
1,941

 
$
1,916

 
$
1,901

 
$
1,890

 
$
1,881

 
$
1,877

 
$
1,865

 
$
1,863

 
$
1,859

 
$
5

2009
 
 
1,310

 
1,307

 
1,251

 
1,222

 
1,205

 
1,198

 
1,198

 
1,195

 
1,194

 
9

2010
 
 
 
 
1,507

 
1,543

 
1,466

 
1,430

 
1,428

 
1,420

 
1,416

 
1,410

 
9

2011
 
 
 
 
 
 
1,963

 
1,938

 
1,881

 
1,859

 
1,839

 
1,843

 
1,838

 
15

2012
 
 
 
 
 
 
 
 
2,034

 
1,918

 
1,884

 
1,866

 
1,861

 
1,848

 
11

2013
 
 
 
 
 
 
 
 
 
 
1,434

 
1,424

 
1,337

 
1,360

 
1,340

 
18

2014
 
 
 
 
 
 
 
 
 
 
 
 
1,647

 
1,663

 
1,581

 
1,561

 
29

2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,737

 
1,746

 
1,650

 
83

2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,911

 
1,888

 
168

2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,641

 
1,089

Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
17,229

 
 
North America Commercial P&C Insurance — Non-Casualty — Short-tail (continued)

Net Cumulative Paid Loss and Allocated Loss Adjustment Expenses
 
 
 
Years Ended December 31
 
 
December 31 2017

(in millions of U.S. dollars)
Unaudited
 
 
 
 
Reported Claims (in thousands)

Accident Year
2008

 
2009

 
2010

 
2011

 
2012

 
2013

 
2014

 
2015

 
2016

 
2017

 
2017

2008
$
965

 
$
1,622

 
$
1,744

 
$
1,794

 
$
1,823

 
$
1,832

 
$
1,838

 
$
1,847

 
$
1,848

 
$
1,851

 
999

2009
 
 
620

 
1,035

 
1,125

 
1,149

 
1,163

 
1,171

 
1,179

 
1,181

 
1,181

 
1,125

2010
 
 
 
 
724

 
1,223

 
1,323

 
1,359

 
1,384

 
1,393

 
1,396

 
1,397

 
1,059

2011
 
 
 
 
 
 
939

 
1,573

 
1,718

 
1,777

 
1,787

 
1,811

 
1,816

 
1,053

2012
 
 
 
 
 
 
 
 
715

 
1,577

 
1,698

 
1,766

 
1,795

 
1,822

 
1,037

2013
 
 
 
 
 
 
 
 
 
 
651

 
1,138

 
1,237

 
1,285

 
1,311

 
1,074

2014
 
 
 
 
 
 
 
 
 
 
 
 
820

 
1,373

 
1,484

 
1,505

 
1,102

2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
726

 
1,343

 
1,488

 
1,173

2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
846

 
1,504

 
1,293

2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
979

 
1,175

Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
14,854

 
 
Net Liabilities for Loss and Allocated Loss Adjustment Expenses

 
 
(in millions of U.S. dollars)
 
December 31, 2017

Accident years prior to 2008
 
$
23

All Accident years
 
$
2,398



Supplementary Information: (Favorable)/ Adverse Prior Period Development
 
 
(in millions of U.S. dollars)
 
December 31, 2017

Accident years prior to 2008
 
$

All Accident years
 
$
(188
)


Supplementary Information: Average Annual Percentage Payout of Net Incurred Claims by Age, as of December 31, 2017

Age in Years
1

 
2

 
3

 
4

 
5

 
6

 
7

 
8

 
9

 
10

Percentage
46
%
 
37
%
 
7
%
 
3
%
 
1
%
 
1
%
 
%
 
%
 
%
 
%



North America Personal P&C Insurance — Short-tail
Chubb provides personal lines coverages for high-net-worth individuals and families in North America including homeowners, automobile, valuable articles (including fine art), umbrella liability, and recreational marine insurance offered through independent regional agents and brokers. A portfolio acquired from Fireman’s Fund is presented on a prospective basis beginning in May of accident year 2015. Reserves associated with prior accident periods were acquired through a loss portfolio transfer, which does not allow for a retrospective presentation. During this ten-year period, this segment was also impacted by natural catastrophes, mainly in 2008, 2012, and 2017 accident years.
North America Personal P&C Insurance — Short-tail (continued)

Net Incurred Loss and Allocated Loss Adjustment Expenses
 
 
 
Years Ended December 31
 
 
December 31 2017

(in millions of U.S. dollars)
Unaudited
 
 
 
 
Net IBNR Reserves

Accident Year
2008

 
2009

 
2010

 
2011

 
2012

 
2013

 
2014

 
2015

 
2016

 
2017

 
2017

2008
$
1,779

 
$
1,779

 
$
1,749

 
$
1,724

 
$
1,695

 
$
1,677

 
$
1,670

 
$
1,661

 
$
1,661

 
$
1,659

 
$
5

2009
 
 
1,611

 
1,598

 
1,568

 
1,554

 
1,545

 
1,538

 
1,538

 
1,534

 
1,533

 
7

2010
 
 
 
 
1,870

 
1,878

 
1,855

 
1,838

 
1,834

 
1,830

 
1,825

 
1,822

 
9

2011
 
 
 
 
 
 
2,208

 
2,210

 
2,185

 
2,173

 
2,164

 
2,160

 
2,159

 
13

2012
 
 
 
 
 
 
 
 
2,185

 
2,183

 
2,183

 
2,191

 
2,185

 
2,186

 
9

2013
 
 
 
 
 
 
 
 
 
 
1,860

 
1,888

 
1,896

 
1,899

 
1,924

 
41

2014
 
 
 
 
 
 
 
 
 
 
 
 
2,205

 
2,206

 
2,192

 
2,145

 
29

2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,494

 
2,549

 
2,560

 
126

2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,439

 
2,542

 
248

2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,034

 
725

Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
21,564

 
 
Net Cumulative Paid Loss and Allocated Loss Adjustment Expenses
 
 
 
Years Ended December 31
 
 
December 31 2017

(in millions of U.S. dollars)
Unaudited
 
 
 
 
Reported Claims (in thousands)

Accident Year
2008

 
2009

 
2010

 
2011

 
2012

 
2013

 
2014

 
2015

 
2016

 
2017

 
2017

2008
$
975

 
$
1,409

 
$
1,521

 
$
1,586

 
$
1,622

 
$
1,638

 
$
1,644

 
$
1,647

 
$
1,651

 
$
1,651

 
139

2009
 
 
887

 
1,236

 
1,347

 
1,439

 
1,486

 
1,503

 
1,513

 
1,521

 
1,523

 
125

2010
 
 
 
 
1,153

 
1,522

 
1,670

 
1,729

 
1,772

 
1,793

 
1,805

 
1,811

 
149

2011
 
 
 
 
 
 
1,360

 
1,835

 
1,971

 
2,051

 
2,105

 
2,129

 
2,138

 
168

2012
 
 
 
 
 
 
 
 
1,176

 
1,806

 
1,957

 
2,063

 
2,117

 
2,149

 
173

2013
 
 
 
 
 
 
 
 
 
 
1,043

 
1,504

 
1,687

 
1,786

 
1,843

 
126

2014
 
 
 
 
 
 
 
 
 
 
 
 
1,310

 
1,764

 
1,925

 
2,034

 
135

2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,499

 
2,083

 
2,270

 
139

2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,453

 
2,051

 
140

2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,698

 
123

Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
19,168

 
 
Net Liabilities for Loss and Allocated Loss Adjustment Expenses
(in millions of U.S. dollars)
 
December 31, 2017

Accident years prior to 2008
 
$
25

All Accident years
 
$
2,421



Supplementary Information: (Favorable)/ Adverse Prior Period Development
(in millions of U.S. dollars)
 
December 31, 2017

Accident years prior to 2008
 
$
(10
)
All Accident years
 
$
76



North America Personal P&C Insurance — Short-tail (continued)

Supplementary Information: Average Annual Percentage Payout of Net Incurred Claims by Age, as of December 31, 2017
Age in Years
1

 
2

 
3

 
4

 
5

 
6

 
7

 
8

 
9

 
10

Percentage
58
%
 
24
%
 
7
%
 
5
%
 
3
%
 
1
%
 
1
%
 
%
 
%
 
%

Overseas General Insurance — Casualty — Long-tail
During the year ended December 31, 2017, we refined our loss development groupings based on the similarity of loss payout characteristics. The new groupings were applied consistently to all years presented. 

This product line is comprised of D&O liability, E&O liability, financial institutions (including crime/fidelity coverages), and non-U.S. general liability as well as aviation and political risk. Exposures are located around the world, including Europe, Latin America, and Asia. Approximately 40 percent of Chubb International’s business is generated by European accounts.
There is some U.S. exposure in Casualty from multinational accounts. The financial lines coverages are typically written on a claims-made form, while general liability coverages are typically on an occurrence basis and comprised of a mix of primary and excess businesses.
Net Incurred Loss and Allocated Loss Adjustment Expenses
 
 
 
Years Ended December 31
 
 
December 31 2017

(in millions of U.S. dollars)
Unaudited
 
 
 
 
Net IBNR Reserves

Accident Year
2008

 
2009

 
2010

 
2011

 
2012

 
2013

 
2014

 
2015

 
2016

 
2017

 
2017

2008
$
1,220

 
$
1,334

 
$
1,423

 
$
1,444

 
$
1,453

 
$
1,408

 
$
1,336

 
$
1,315

 
$
1,330

 
$
1,281

 
$
81

2009
 
 
1,284

 
1,425

 
1,474

 
1,485

 
1,482

 
1,365

 
1,257

 
1,256

 
1,202

 
76

2010
 
 
 
 
1,231

 
1,311

 
1,358

 
1,430

 
1,365

 
1,312

 
1,183

 
1,178

 
97

2011
 
 
 
 
 
 
1,272

 
1,277

 
1,270

 
1,262

 
1,176

 
1,109

 
1,094

 
157

2012
 
 
 
 
 
 
 
 
1,311

 
1,281

 
1,348

 
1,367

 
1,363

 
1,345

 
279

2013
 
 
 
 
 
 
 
 
 
 
1,289

 
1,284

 
1,284

 
1,330

 
1,270

 
314

2014
 
 
 
 
 
 
 
 
 
 
 
 
1,295

 
1,366

 
1,377

 
1,388

 
506

2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,223

 
1,324

 
1,353

 
542

2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,227

 
1,333

 
749

2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,229

 
968

Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
12,673

 
 
Overseas General Insurance — Casualty — Long-tail (continued)

Net Cumulative Paid Loss and Allocated Loss Adjustment Expenses
 
 
 
Years Ended December 31
 
 
December 31 2017

(in millions of U.S. dollars)
Unaudited
 
 
 
 
Reported Claims (in thousands)

Accident Year
2008

 
2009

 
2010

 
2011

 
2012

 
2013

 
2014

 
2015

 
2016

 
2017

 
2017

2008
$
121

 
$
306

 
$
472

 
$
642

 
$
790

 
$
895

 
$
971

 
$
1,029

 
$
1,083

 
$
1,116

 
39

2009
 
 
123

 
341

 
524

 
667

 
763

 
824

 
896

 
993

 
1,020

 
39

2010
 
 
 
 
109

 
277

 
481

 
629

 
740

 
831

 
883

 
938

 
41

2011
 
 
 
 
 
 
91

 
250

 
400

 
534

 
638

 
719

 
795

 
42

2012
 
 
 
 
 
 
 
 
77

 
254

 
443

 
598

 
714

 
856

 
42

2013
 
 
 
 
 
 
 
 
 
 
90

 
272

 
432

 
584

 
727

 
42

2014
 
 
 
 
 
 
 
 
 
 
 
 
117

 
299

 
481

 
614

 
43

2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
92

 
296

 
504

 
45

2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
127

 
328

 
45

2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
99

 
34

Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
6,997

 
 
Net Liabilities for Loss and Allocated Loss Adjustment Expenses
(in millions of U.S. dollars)
 
December 31, 2017

Accident years prior to 2008 
 
$
350

All Accident years
 
$
6,026



Supplementary Information: (Favorable)/ Adverse Prior Period Development
(in millions of U.S. dollars)
 
December 31, 2017

Accident years prior to 2008
 
$
(13
)
All Accident years
 
$
(68
)


Supplementary Information: Average Annual Percentage Payout of Net Incurred Claims by Age, as of December 31, 2017
Age in Years
1

 
2

 
3

 
4

 
5

 
6

 
7

 
8

 
9

 
10

Percentage
8
%
 
15
%
 
14
%
 
12
%
 
10
%
 
8
%
 
6
%
 
6
%
 
3
%
 
3
%


Overseas General Insurance — Non-Casualty — Short-tail
During the year ended December 31, 2017, we refined our loss development groupings based on the similarity of loss payout characteristics. The new groupings were applied consistently to all years presented. In addition, the Overseas General segment disclosure has been enhanced to include some previously excluded international business as data became available. This includes historical experience for most acquisitions. The added business is principally Non-Casualty; personal automobile, property and surety lines in Latin America and Asia Pacific regions.

This product line is comprised of commercial fire, marine (predominantly cargo), surety, personal automobile (in Latin America, Asia Pacific and Japan), personal cell phones, personal residential (including high net worth), energy and construction. Latin America and Europe each make up about 35 percent of the Chubb International non-casualty book. In general, these lines have relatively stable payment and reporting patterns although they are impacted by natural catastrophes mainly in the 2008, 2010, 2011, and 2017 accident years.
Overseas General Insurance — Non-Casualty — Short-tail (continued)

Net Incurred Loss and Allocated Loss Adjustment Expenses
 
 
 
Years Ended December 31
 
 
December 31 2017

(in millions of U.S. dollars)
Unaudited
 
 
 
 
Net IBNR Reserves

Accident Year
2008

 
2009

 
2010

 
2011

 
2012

 
2013

 
2014

 
2015

 
2016

 
2017

 
2017

2008
$
1,609

 
$
1,608

 
$
1,563

 
$
1,547

 
$
1,553

 
$
1,527

 
$
1,524

 
$
1,519

 
$
1,508

 
$
1,504

 
$
25

2009
 
 
1,564

 
1,534

 
1,446

 
1,415

 
1,395

 
1,377

 
1,377

 
1,366

 
1,366

 
3

2010
 
 
 
 
1,713

 
1,734

 
1,705

 
1,693

 
1,687

 
1,673

 
1,660

 
1,643

 
13

2011
 
 
 
 
 
 
1,950

 
2,035

 
1,978

 
1,939

 
1,920

 
1,908

 
1,901

 
7

2012
 
 
 
 
 
 
 
 
1,775

 
1,764

 
1,723

 
1,667

 
1,661

 
1,650

 
34

2013
 
 
 
 
 
 
 
 
 
 
1,868

 
1,859

 
1,787

 
1,739

 
1,730

 
62

2014
 
 
 
 
 
 
 
 
 
 
 
 
1,975

 
2,048

 
1,985

 
1,959

 
72

2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,111

 
2,243

 
2,195

 
157

2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,164

 
2,148

 
19

2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,349

 
307

Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
18,445

 
 
Net Cumulative Paid Loss and Allocated Loss Adjustment Expenses
 
 
 
Years Ended December 31
 
 
December 31 2017

(in millions of U.S. dollars)
Unaudited
 
 
 
 
Reported Claims (in thousands)

Accident Year
2008

 
2009

 
2010

 
2011

 
2012

 
2013

 
2014

 
2015

 
2016

 
2017

 
2017

2008
$
646

 
$
1,218

 
$
1,360

 
$
1,428

 
$
1,451

 
$
1,461

 
$
1,469

 
$
1,477

 
$
1,477

 
$
1,484

 
539

2009
 
 
602

 
1,095

 
1,233

 
1,300

 
1,324

 
1,335

 
1,341

 
1,344

 
1,343

 
518

2010
 
 
 
 
698

 
1,276

 
1,480

 
1,543

 
1,583

 
1,596

 
1,603

 
1,604

 
561

2011
 
 
 
 
 
 
793

 
1,520

 
1,728

 
1,786

 
1,817

 
1,832

 
1,841

 
579

2012
 
 
 
 
 
 
 
 
716

 
1,284

 
1,479

 
1,539

 
1,562

 
1,572

 
600

2013
 
 
 
 
 
 
 
 
 
 
738

 
1,340

 
1,541

 
1,574

 
1,612

 
622

2014
 
 
 
 
 
 
 
 
 
 
 
 
800

 
1,497

 
1,715

 
1,782

 
594

2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
901

 
1,638

 
1,873

 
627

2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,083

 
1,752

 
637

2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,098

 
616

Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
15,961

 
 
Net Liabilities for Loss and Allocated Loss Adjustment Expenses


(in millions of U.S. dollars)
 
December 31, 2017

Accident years prior to 2008
 
$
65

All Accident years
 
$
2,549



Supplementary Information: (Favorable)/ Adverse Prior Period Development
(in millions of U.S. dollars)
 
December 31, 2017

Accident years prior to 2008
 
$
(3
)
All Accident years
 
$
(141
)


Overseas General Insurance — Non-Casualty — Short-tail (continued)

Supplementary Information: Average Annual Percentage Payout of Net Incurred Claims by Age, as of December 31, 2017
Age in Years
1

 
2

 
3

 
4

 
5

 
6

 
7

 
8

 
9

 
10

Percentage
44
%
 
35
%
 
11
%
 
4
%
 
2
%
 
1
%
 
%
 
%
 
 %
 
%



Global Reinsurance
Chubb analyzes its Global Reinsurance business on a treaty year basis rather than on an accident year basis. Treaty year data was converted to an accident year basis for the purposes of this disclosure. Mix shifts are an important consideration in these product line groupings. As proportional business and excess of loss business have different earning and loss reporting and payment patterns, this change in mix will affect the cash flow patterns across the accident years. In addition, the shift from excess to proportional business over time will make the cash flow patterns of older and more recent years difficult to compare. In general, the proportional business will pay out more quickly than the excess of loss business, as such, using older years development patterns may overstate the ultimate loss estimates in more recent years.

Global Reinsurance — Casualty — Long-tail
During the year ended December 31, 2017, we refined our loss development groupings based on the similarity of loss payout characteristics. The new groupings were applied consistently to all years presented.

This product line includes proportional and excess coverages in general, automobile liability, professional liability, medical malpractice, workers' compensation and aviation, with exposures located around the world. In general, reinsurance exhibits less stable development patterns than primary business. In particular general casualty reinsurance and excess coverages are long-tailed and can be very volatile.

Net Incurred Loss and Allocated Loss Adjustment Expenses
 
 
 
Years Ended December 31
 
 
December 31 2017

(in millions of U.S. dollars)
Unaudited
 
 
 
 
Net IBNR Reserves

Accident Year
2008

 
2009

 
2010

 
2011

 
2012

 
2013

 
2014

 
2015

 
2016

 
2017

 
2017

2008
$
399

 
$
420

 
$
439

 
$
431

 
$
428

 
$
407

 
$
408

 
$
404

 
$
401

 
$
399

 
$
48

2009
 
 
319

 
351

 
363

 
370

 
366

 
347

 
331

 
320

 
316

 
24

2010
 
 
 
 
401

 
421

 
432

 
443

 
432

 
426

 
416

 
402

 
55

2011
 
 
 
 
 
 
409

 
416

 
431

 
434

 
429

 
419

 
415

 
45

2012
 
 
 
 
 
 
 
 
387

 
383

 
391

 
394

 
379

 
372

 
23

2013
 
 
 
 
 
 
 
 
 
 
321

 
327

 
330

 
330

 
331

 
41

2014
 
 
 
 
 
 
 
 
 
 
 
 
333

 
334

 
340

 
343

 
46

2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
285

 
289

 
300

 
47

2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
224

 
228

 
63

2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
214

 
121

Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
3,320

 
 
Global Reinsurance — Casualty — Long-tail (continued)

Net Cumulative Paid Loss and Allocated Loss Adjustment Expenses
 
 
 
Years Ended December 31
 
 
December 31 2017

(in millions of U.S. dollars)
Unaudited
 
 
 
 
Reported Claims (in thousands)

Accident Year
2008

 
2009

 
2010

 
2011

 
2012

 
2013

 
2014

 
2015

 
2016

 
2017

 
2017

2008
$
33

 
$
77

 
$
131

 
$
176

 
$
220

 
$
253

 
$
277

 
$
295

 
$
305

 
$
315

 
1.209

2009
 
 
34

 
79

 
116

 
154

 
187

 
209

 
227

 
241

 
256

 
0.868

2010
 
 
 
 
56

 
125

 
179

 
221

 
249

 
274

 
292

 
307

 
0.795

2011
 
 
 
 
 
 
70

 
146

 
195

 
236

 
267

 
291

 
311

 
0.660

2012
 
 
 
 
 
 
 
 
77

 
167

 
222

 
261

 
292

 
308

 
0.472

2013
 
 
 
 
 
 
 
 
 
 
65

 
143

 
186

 
222

 
242

 
0.337

2014
 
 
 
 
 
 
 
 
 
 
 
 
92

 
185

 
218

 
249

 
0.400

2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
90

 
159

 
191

 
0.304

2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
57

 
113

 
0.258

2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
47

 
0.088

Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
2,339

 
 
Net Liabilities for Loss and Allocated Loss Adjustment Expenses


(in millions of U.S. dollars)
 
December 31, 2017

Accident years prior to 2008
 
$
359

All Accident years
 
$
1,340



Supplementary Information: (Favorable)/ Adverse Prior Period Development
(in millions of U.S. dollars)
 
December 31, 2017

Accident years prior to 2008
 
$
(60
)
All Accident years
 
$
(72
)


Supplementary Information: Average Annual Percentage Payout of Net Incurred Claims by Age, as of December 31, 2017
Age in Years
1

 
2

 
3

 
4

 
5

 
6

 
7

 
8

 
9

 
10

Percentage
19
%
 
20
%
 
12
%
 
11
%
 
8
%
 
6
%
 
5
%
 
4
%
 
4
%
 
3
%


Global Reinsurance — Non-Casualty — Short-tail
During the year ended December 31, 2017, we refined our loss development groupings based on the similarity of loss payout characteristics. The new groupings were applied consistently to all years presented.

This product line includes property, property catastrophe, marine, credit/surety, A&H and energy. This product line is impacted by natural catastrophes, particularly in the 2008, 2011 and 2017 years. Of the non-catastrophe book, the mixture of business varies by year with approximately 72 percent of loss on proportional treaties in Treaty Year 2008 and after. This percentage has increased over time with the proportion being approximately 60 percent from 2008 to 2012 growing to an average of 84 percent from 2013 to 2017, with the remainder being written on an excess of loss basis.
Global Reinsurance — Non-Casualty — Short-tail (continued)

 
 
Net Incurred Loss and Allocated Loss Adjustment Expenses

 
Years Ended December 31

 
 
December 31 2017

(in millions of U.S. dollars)
Unaudited
 
 
 
 
Net IBNR Reserves

Accident Year
2008

 
2009

 
2010

 
2011

 
2012

 
2013

 
2014

 
2015

 
2016

 
2017

 
2017

2008
$
316

 
$
310

 
$
301

 
$
292

 
$
286

 
$
286

 
$
287

 
$
284

 
$
285

 
$
286

 
$
2

2009
 
 
141

 
172

 
152

 
150

 
144

 
141

 
139

 
139

 
139

 
3

2010
 
 
 
 
200

 
235

 
224

 
218

 
222

 
224

 
225

 
225

 
5

2011
 
 
 
 
 
 
274

 
275

 
272

 
262

 
263

 
264

 
264

 
1

2012
 
 
 
 
 
 
 
 
232

 
210

 
200

 
191

 
189

 
187

 
2

2013
 
 
 
 
 
 
 
 
 
 
163

 
160

 
149

 
143

 
144

 
5

2014
 
 
 
 
 
 
 
 
 
 
 
 
163

 
179

 
179

 
182

 
9

2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
146

 
154

 
161

 
8

2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
182

 
188

 
17

2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
396

 
82

Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
2,172

 
 
Net Cumulative Paid Loss and Allocated Loss Adjustment Expenses

 
Years Ended December 31

 
 
December 31 2017

(in millions of U.S. dollars)
Unaudited
 
 
 
 
Reported Claims (in thousands)

Accident Year
2008

 
2009

 
2010

 
2011

 
2012

 
2013

 
2014

 
2015

 
2016

 
2017

 
2017

2008
$
79

 
$
177

 
$
228

 
$
260

 
$
274

 
$
276

 
$
278

 
$
280

 
$
280

 
$
280

 
0.179

2009
 
 
52

 
106

 
122

 
129

 
132

 
134

 
134

 
134

 
134

 
0.114

2010
 
 
 
 
56

 
162

 
188

 
200

 
205

 
216

 
214

 
217

 
0.101

2011
 
 
 
 
 
 
85

 
176

 
207

 
232

 
251

 
255

 
258

 
0.128

2012
 
 
 
 
 
 
 
 
44

 
129

 
156

 
166

 
172

 
177

 
0.113

2013
 
 
 
 
 
 
 
 
 
 
46

 
103

 
121

 
131

 
133

 
0.119

2014
 
 
 
 
 
 
 
 
 
 
 
 
65

 
128

 
151

 
162

 
0.100

2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
56

 
103

 
132

 
0.110

2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
57

 
132

 
0.168

2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
191

 
0.205

Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
1,816

 
 
Net Liabilities for Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)
 
December 31, 2017

Accident years prior to 2008
 
$
15

All Accident years
 
$
371


Supplementary Information: (Favorable)/ Adverse Prior Period Development
(in millions of U.S. dollars)
 
December 31, 2017

Accident years prior to 2008
 
$

All Accident years
 
$
16



Supplementary Information: Average Annual Percentage Payout of Net Incurred Claims by Age, as of December 31, 2017
Age in Years
1

 
2

 
3

 
4

 
5

 
6

 
7

 
8

 
9

 
10

Percentage
34
%
 
38
%
 
14
%
 
7
%
 
4
%
 
2
%
 
%
 
1
%
 
%
 
 %


Prior Period Development — Supplementary Information
The following table presents a reconciliation of the loss development triangles above to prior period development:
 
Components of PPD
 
Year Ended December 31, 2017
(in millions of U.S. dollars)
2008 - 2016 accident years (implied PPD per loss triangles)

 
Accident years prior to 2008

 
Other (1)

 
PPD on loss reserves

 
RIPs, Expense adjustments, and earned premiums

 
Total

(favorable)/unfavorable
 
 
 
 
 
 
 
 
 
 
 
North America Commercial P&C Insurance
 
 
 
 
 
 


 
 
 


Long-tail
$
(367
)
 
$
(175
)
 
$
(76
)
 
$
(618
)
 
$
56

 
$
(562
)
Short-tail
(188
)
 

 
3

 
(185
)
 
1

 
(184
)
 
(555
)
 
(175
)
 
(73
)
(2) 
(803
)
 
57

 
(746
)
North America Personal P&C Insurance (Short-tail)
86

 
(10
)
 
(7
)
 
69

 

 
69

Overseas General Insurance
 
 
 
 
 
 


 
 
 


Long-tail
(55
)
 
(13
)
 
(3
)
 
(71
)
 

 
(71
)
Short-tail
(138
)
 
(3
)
 
(40
)
 
(181
)
 

 
(181
)
 
(193
)
 
(16
)
 
(43
)
(3) 
(252
)
 

 
(252
)
Global Reinsurance
 
 
 
 
 
 


 
 
 


Long-tail
(12
)
 
(60
)
 
1

 
(71
)
 
3

 
(68
)
Short-tail
16

 

 

 
16

 
(7
)
 
9

 
4

 
(60
)
 
1

 
(55
)
 
(4
)
 
(59
)
Subtotal
$
(658
)
 
$
(261
)
 
$
(122
)
 
$
(1,041
)
 
$
53

 
$
(988
)
North America Agricultural Insurance (Short-tail)
 
 
 
 
 
 
$
(174
)
 
$
55

 
$
(119
)
Corporate (Long-tail)
 
 
 
 
 
 
278

 

 
278

Consolidated PPD


 


 


 
$
(937
)
 
$
108

 
$
(829
)
(1) Other includes the impact of foreign exchange.
(2) Includes favorable development of $55 million related to our Alternative Risk Solutions business; the remaining difference relates to a number of other items, none of which are individually material.
(3) Includes favorable development of $35 million related to International A&H business, the remaining difference relates to a number of other items, none of which are individually material.

Prior Period Development
The following table summarizes (favorable) and adverse prior period development (PPD) by segment. Long-tail lines include lines such as workers' compensation, general liability, and professional liability; while short-tail lines include lines such as most property lines, energy, personal accident, and agriculture. In 2017, we determined that the loss development classification for certain businesses, previously grouped within the short-tail column in the table below, would be more appropriately grouped within the long-tail column to better align with the classification of these businesses within our loss development triangles. We also determined that the loss development for certain other businesses should be reclassified from long-tail to short-tail. We updated our 2016 and 2015 amounts below to conform to the current year presentation and reclassified $101 million and $46 million, respectively, of net favorable development into long-tail from short-tail. These changes to the previously disclosed amounts have no impact to our financial condition and results of operations.

Years Ended December 31
(in millions of U.S. dollars, except for percentages)
Long-tail    

 
Short-tail    

 
Total

 
% of beginning net unpaid reserves (1)

2017
 
 
 
 
 
 
 
North America Commercial P&C Insurance
$
(562
)
 
$
(184
)
 
$
(746
)
 
1.6
%
North America Personal P&C Insurance

 
69

 
69

 
0.1
%
North America Agricultural Insurance

 
(119
)
 
(119
)
 
0.2
%
Overseas General Insurance
(71
)
 
(181
)
 
(252
)
 
0.5
%
Global Reinsurance
(68
)
 
9

 
(59
)
 
0.1
%
Corporate
278

 

 
278

 
0.6
%
Total
$
(423
)
 
$
(406
)
 
$
(829
)
 
1.7
%
2016
 
 
 
 
 
 
 
North America Commercial P&C Insurance
$
(693
)
 
$
(85
)
 
$
(778
)
 
1.6
%
North America Personal P&C Insurance

 
27

 
27

 
0.1
%
North America Agricultural Insurance

 
(72
)
 
(72
)
 
0.2
%
Overseas General Insurance
(236
)
 
(187
)
 
(423
)
 
0.9
%
Global Reinsurance
(77
)
 
(1
)
 
(78
)
 
0.2
%
Corporate
189

 

 
189

 
0.4
%
Total
$
(817
)
 
$
(318
)
 
$
(1,135
)
 
2.4
%
2015
 
 
 
 
 
 
 
North America Commercial P&C Insurance
$
(162
)
 
$
(102
)
 
$
(264
)
 
1.0
%
North America Personal P&C Insurance

 
25

 
25

 
0.1
%
North America Agricultural Insurance

 
(45
)
 
(45
)
 
0.1
%
Overseas General Insurance
(192
)
 
(151
)
 
(343
)
 
1.3
%
Global Reinsurance
(109
)
 
(10
)
 
(119
)
 
0.4
%
Corporate
200

 

 
200

 
0.7
%
Total
$
(263
)
 
$
(283
)
 
$
(546
)
 
2.0
%
(1) Calculated based on the beginning of period consolidated net unpaid losses and loss expenses. For 2016, the percent of beginning net unpaid reserves is calculated inclusive of the net unpaid losses and loss expenses acquired in the Chubb Corp acquisition of $21.4 billion.

North America Commercial P&C Insurance
2017
North America Commercial P&C Insurance experienced net favorable PPD of $746 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

Net favorable development of $562 million in long-tail business, primarily from:

Net favorable development of $184 million in our commercial excess and umbrella portfolios, primarily in accident years 2011 and prior, driven by lower than expected case activity and an increase in weighting towards experience-based methods. Large loss activity in accident year 2015 led to adverse development in that year, partially offsetting the favorable development in the older years;

Net favorable development of $181 million in our management liability portfolios, favorably impacting accident years 2012 and prior where paid and reported loss activity was lower than expected, partially offset by adverse development in accident years 2014 through 2016, mostly as a result of higher severity claim costs compared to prior expectations in certain lines or coverages;

Net favorable development of $123 million in our workers’ compensation businesses (including excess workers' compensation) with favorable development of $57 million in the 2016 accident year related to our annual assessment of multi-claimant events including industrial accidents. Consistent with prior years, we reviewed these potential exposures after the close of the accident year to allow for late reporting or identification of significant losses. Net favorable development of $65 million was principally due to lower than expected loss experience and updates to development patterns used in our loss projection methods, mainly impacting accident years 2013 and prior, and partially offset by smaller adverse development in the more recent prior accident years;

Net favorable development of $32 million in our professional Errors and Omissions (E&O) portfolios, primarily in the 2012 and 2013 accident years, arising from lower than expected reported loss activity, partially offset by claim-specific adverse development in other years;

Net favorable development of $28 million on several large multi-line prospective deals primarily impacting the 2012 and 2013 accident years, due to lower than expected reported loss activity. These structured deals typically cover large clients for multiple product lines and with varying loss limitations; this development is net of premium adjustments of $26 million tied to the loss performance of the particular deals;

Net favorable development of $21 million in our political risk portfolio, primarily impacting the 2013 accident year, principally due to reported experience below expectations and an increase in weighting towards experience-based methods; and

Net adverse development of $21 million in our auto liability lines, primarily in the 2012 through 2015 accident years, driven by higher than expected paid and reported experience.

Net favorable development of $184 million in short-tail business, primarily from:

Net favorable development of $98 million in our property and inland marine portfolios, impacting the 2012 through 2016 accident years, resulting from lower than expected loss emergence;

Net favorable development of $45 million in our surety business, primarily due to lower than expected claims severity in the 2015 accident year; and

Net favorable development of $20 million in our accident & health (A&H) business, primarily due to lower than expected loss emergence in the 2015 and 2016 accident years.

2016
North America Commercial P&C Insurance experienced net favorable PPD of $778 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

Net favorable development of $693 million in long-tail business, primarily from:

Net favorable development of $264 million in our commercial excess and umbrella portfolios, primarily in accident years 2010 and prior, driven by lower than expected reported loss activity and an increase in weighting towards experience-based methods; in general, the severity of claims has been less than expected;

Net favorable development of $220 million in our management liability portfolios, where paid and reported loss activity was lower than expected. The majority of this favorable activity impacted accident years 2011 and prior. Partially offsetting this were smaller amounts of adverse development in the more recent accident years, mostly as a result of higher severity claim costs compared to prior expectations in some lines;

Net favorable development of $141 million in our workers’ compensation lines with favorable development of $40 million in the 2015 accident year related to our annual assessment of multi-claimant events including industrial accidents. Favorable development of $92 million driven by accident years 2012 and prior was principally due to lower than expected loss experience and revision to the basis for selecting development patterns used in our loss projection methods for select portfolios;

Favorable development of $58 million in our professional Errors & Omission (E&O) portfolios, primarily impacting the 2012 and prior accident years and arising from both lower than expected reported loss activity and re-assessments of remaining claim-specific liabilities for the older accident years; and

Net favorable development of $21 million in our political risk business, mainly due to favorable claim emergence in the 2012 accident year.

Net favorable development of $85 million in short-tail business, primarily from our property and inland marine portfolios, impacting the 2014 and 2015 accident years, resulting from lower than expected loss emergence.

2015
North America Commercial P&C Insurance experienced net favorable PPD of $264 million, representing 1.0 percent of the beginning consolidated net unpaid losses and loss expense reserves.

North America Personal P&C Insurance
2017
North America Personal P&C Insurance incurred net adverse PPD of $69 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

Net adverse development of $105 million in our homeowners lines, primarily impacting the 2013 and 2016 accident years, due to higher than expected loss severity; and

Net favorable development of $58 million in our personal excess lines primarily impacting the 2014 accident year, due to lower than expected loss experience and an increased weighting towards experience-based methods.

2016
North America Personal P&C Insurance incurred net adverse PPD of $27 million, in our homeowners and umbrella lines due to higher than expected loss emergence. Average loss severities were higher than expected, and to a lesser degree, reinsurance and other recoveries were lower than expected.

2015
North America Personal P&C Insurance incurred net adverse PPD of $25 million, representing 0.1 percent of the beginning consolidated net unpaid losses and loss expense reserves.

North America Agricultural Insurance
North America Agricultural Insurance experienced net favorable development of $119 million, $72 million, and $45 million in 2017, 2016, and 2015, respectively. Actual claim development relates to our Multiple Peril Crop Insurance (MPCI) business and is favorable due to better than expected crop yield results in certain states at the prior year-end period (i.e., 2017 results based on crop yield results at year-end 2016).

Overseas General Insurance
2017
Overseas General Insurance experienced net favorable PPD of $252 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

Net favorable development of $71 million in long-tail business, primarily from:

Net favorable development of $34 million in financial lines, with favorable development of $124 million in accident years 2013 and prior, resulting from lower than expected loss emergence including favorable development on specific, litigated claims, partially offset by adverse development of $90 million in accident years 2014 through 2016, primarily due to large loss experience in specific Directors and Officers (D&O) portfolios within the U.K., Continental Europe, and Australia and Financial Institutions lines in the U.K. and Continental Europe; and

Net favorable development of $10 million in casualty lines, with favorable development of $69 million in accident years 2013 and prior, resulting from lower than expected loss emergence, partially offset by adverse development of $32 million driven by a change in the discount rate in the U.K. (Ogden rate) impacting the 2016 and prior accident years and adverse development of $27 million in accident years 2014 to 2016, primarily due to large loss experience in U.K. excess lines and wholesale business.

Net favorable development of $181 million in short-tail business, primarily from:

Net favorable development of $48 million in A&H lines, primarily from favorable loss emergence in Asia Pacific and Continental Europe in accident years 2014 through 2016;

Net favorable development of $43 million in technical and energy lines, primarily from favorable loss emergence in accident years 2014 through 2016 primarily in offshore and power generation where experience has been better than expected;

Favorable development of $42 million in marine, primarily in accident years 2015 and 2016, driven mainly by favorable cargo loss emergence, including favorable claim-specific loss settlements and recoveries; and

Favorable development of $25 million in property (excluding technical lines), primarily in accident years 2013 through 2015, driven mainly by favorable loss emergence, including claim-specific loss settlements in all regions except Asia Pacific, partially offset by adverse Asia Pacific large loss experience in accident year 2016.

2016
Overseas General Insurance experienced net favorable PPD of $423 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

Net favorable development of $236 million in long-tail business, primarily from:

Net favorable development of $177 million, primarily in casualty and financial lines, with favorable development of $266 million in accident years 2012 and prior, resulting from lower than expected loss emergence, and adverse development of $89 million in accident years 2013 to 2015, primarily due to large loss experience in our D&O portfolio in Asia and financial lines in Europe;

Favorable development of $28 million in aviation lines due to lower than expected loss emergence and case-specific reserve reductions impacting accident years 2012 and prior; and

Favorable development of $25 million on an individual legacy liability case reserve take-down. This release follows a legal analysis completed in 2016, based on court opinion in the year and discussions with defense counsel, which concluded that these reserves were no longer required.

Net favorable development of $187 million in short-tail business, primarily from:

Favorable development of $97 million in property (including technical lines), primarily from favorable Continental Europe loss emergence in accident years 2012 through 2014;

Favorable development of $43 million in energy lines, driven by favorable loss emergence in accident years 2010 through 2014, primarily in offshore where experience on multi-year construction accounts has been better than expected, as well as a claims review of catastrophe impacts on underwriting years 2004 through 2008; and

Favorable development of $28 million in accident & health (A&H) lines related to development of claim reserves, due to lower than expected loss emergence, primarily in Asia Pacific and Continental Europe in accident years 2013 through 2015.

2015
Overseas General Insurance experienced net favorable PPD of $343 million, representing 1.3 percent of the beginning consolidated net unpaid losses and loss expense reserves.

Global Reinsurance
2017
Global Reinsurance experienced net favorable PPD of $59 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

Net favorable development of $68 million on long-tail lines of business, primarily from:

Net favorable development of $67 million in our casualty (excluding motor), professional liability, and medical malpractice lines, primarily from treaty years 2013 and prior, principally resulting from lower than expected loss emergence in the U.S. portfolios; and

Net adverse development of $10 million in our motor and excess liability lines, primarily due to adverse development of $9 million driven by a change in the discount rate in the U.K. (Ogden rate) primarily impacting the 2015 and prior treaty years.

Net adverse development of $9 million in our short-tail business, none of which was significant individually or in the aggregate.

2016
Global Reinsurance experienced net favorable PPD of $78 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

Net favorable development of $42 million in casualty lines primarily impacting treaty years 2011 and prior, principally resulting from lower than expected loss emergence; and

Net favorable development of $30 million in professional liability lines primarily impacting treaty years 2011 and prior due to lower than expected loss emergence.

2015
Global Reinsurance experienced net favorable PPD of $119 million, representing 0.4 percent of the beginning consolidated net unpaid losses and loss expense reserves.

Corporate
2017
Corporate incurred adverse development of $278 million in long-tail lines, driven by the following principal changes:

Adverse development of $239 million in asbestos, environmental, and other run-off liabilities, driven primarily by resolution of a limited number of direct cases, increases in severity trends, somewhat greater than expected defense spending and increases in reported claims for certain assumed reinsurance portfolios; and

Adverse development of $39 million on unallocated loss adjustment expenses due to run-off operating expenses paid and incurred in 2017.

2016
Corporate incurred adverse development of $189 million in long-tail lines, driven by the following principal changes:

Adverse development of $141 million in asbestos, environmental, and other run-off liabilities primarily arose as a result of the annual review of individual accounts and case specific exposures, with account changes driven by recent frequency and severity trends, certain case specific settlements and higher than expected defense spending; and

Adverse development of $48 million on unallocated loss adjustment expenses due to run-off operating expenses paid and incurred in 2016.

2015
Corporate incurred adverse PPD of $200 million, representing 0.7 percent of the beginning consolidated net unpaid losses and loss expense reserves.

Asbestos and environmental (A&E)

Chubb's exposure to A&E claims principally arises out of liabilities acquired when it purchased Westchester Specialty in 1998, CIGNA's P&C business in 1999, and Chubb Corp in 2016. The following table presents a roll-forward of consolidated A&E loss reserves including allocated loss expense reserves for A&E exposures, and the provision for uncollectible paid and unpaid reinsurance recoverables:
 
 
Asbestos
 
 
Environmental
 
 
Total
 
 
(in millions of U.S. dollars)
 
Gross

 
Net

 
Gross


Net

 
Gross

 
Net

 
Balance at December 31, 2016
 
$
1,726

 
$
1,119

 
$
577

 
$
490

 
$
2,303

 
$
1,609

 
Incurred activity
 
228

 
104

 
199

 
113

 
427

 
217

(1) 
Paid activity
 
(333
)
 
(172
)
 
(169
)
 
(127
)
 
(502
)
 
(299
)
 
Balance at December 31, 2017
 
$
1,621

 
$
1,051

 
$
607

 
$
476

 
$
2,228

 
$
1,527

 

(1) Excludes unallocated loss expenses and the net activity reflects third-party reinsurance other than the aggregate excess of loss reinsurance provided by National Indemnity Company (NICO) to Westchester Specialty (see Westchester Specialty section below).

The A&E net loss reserves including allocated loss expense reserves and provision for uncollectible reinsurance at December 31, 2017 and 2016 shown in the table above is comprised of:
 
December 31
 
(in millions of U.S. dollars)
2017

 
2016

Brandywine operations
$
849

 
$
760

Westchester Specialty
113

 
112

Chubb Corp
486

 
657

Other, mainly Overseas General Insurance
79

 
80

Total
$
1,527

 
$
1,609



The incurred activity of $217 million in 2017 and $164 million in 2016 were primarily the result of our annual internal, ground-up review of A&E liabilities.

Brandywine Run-off entities The Restructuring Plan and uncertainties relating to Chubb's ultimate Brandywine exposure

In 1996, the Pennsylvania Insurance Commissioner approved a plan to restructure INA Financial Corporation and its subsidiaries (the Restructuring) which included the division of Insurance Company of North America (INA) into two separate corporations:

(1) An active insurance company that retained the INA name and continued to write P&C business; and
(2) An inactive run-off company, now called Century Indemnity Company (Century).

As a result of the division, predominantly all A&E and certain other liabilities of INA were ascribed to Century and extinguished, as a matter of Pennsylvania law, as liabilities of INA.

As part of the Restructuring, most A&E liabilities of various U.S. affiliates of INA were reinsured to Century. Century and certain other run-off companies having A&E and other liabilities were contributed to Brandywine Holdings.

The U.S.-based Chubb INA companies assumed two contractual obligations in respect of the Brandywine operations in connection with the Restructuring: a surplus maintenance obligation in the form of the excess of loss (XOL) agreement and a dividend retention fund obligation.

XOL Agreement
In 1996, in connection with the Restructuring, a Chubb INA insurance subsidiary provided reinsurance coverage to Century in the amount of $800 million under an Aggregate Excess of Loss Reinsurance Agreement (XOL Agreement), triggerable if the statutory capital and surplus of Century falls below $25 million or if Century lacks liquid assets with which to pay claims as they become due.

Dividend Retention Fund
INA Financial Corporation established and funded a dividend retention fund (the Dividend Retention Fund) consisting of $50 million plus investment earnings. The full balance of the Dividend Retention Fund was contributed to Century as of December 31, 2002. Under the Restructuring Order, while any obligation to maintain the Dividend Retention Fund is in effect, to the extent dividends are paid by INA Holdings Corporation to its parent, INA Financial Corporation, and to the extent INA Financial Corporation then pays such dividends to INA Corporation, a portion of those dividends must be withheld to replenish the principal of the Dividend Retention Fund to $50 million. During 2011 and 2010, $35 million and $15 million, respectively, were withheld from such dividends and deposited into the Dividend Retention Fund as a result of dividends paid up to the INA Corporation. Pursuant to a 2011 amendment to the Restructuring Order, capital contributions from the Dividend Retention Fund to Century are not required until the XOL Agreement has less than $200 million of capacity remaining on an incurred basis for statutory reporting purposes. The amount of the capital contribution shall be the lesser of the amount necessary to restore the XOL Agreement remaining capacity to $200 million or the Dividend Retention Fund balance. In 2017, the Pennsylvania Department of Insurance approved a capital contribution of $49 million from the Dividend Retention Fund to Century in order to restore the XOL capacity to $200 million. The Dividend Retention Fund may not be terminated without prior written approval from the Pennsylvania Insurance Commissioner.

Effective December 31, 2004, Chubb INA contributed $100 million to Century in exchange for a surplus note. After giving effect to the contribution and issuance of the surplus note, the statutory surplus of Century at December 31, 2017 was $25 million and $672 million in statutory-basis losses have been ceded to the XOL Agreement on an inception-to-date basis. Century reports the amount ceded under the XOL Agreement in accordance with statutory accounting principles, which differ from GAAP by, among other things, allowing Century to discount its liabilities, including certain asbestos related and environmental pollution liabilities and Century's reinsurance payable to active companies. For GAAP reporting purposes, intercompany reinsurance recoverables related to the XOL are eliminated upon consolidation.

While Chubb believes it has no legal obligation to fund Century losses above the XOL limit of coverage, Chubb's consolidated results would nevertheless continue to include any losses above the limit of coverage for so long as the Brandywine companies remain consolidated subsidiaries of Chubb.

Certain active Chubb companies are primarily liable for asbestos, environmental, and other exposures that they have reinsured to Century. Accordingly, if Century were to become insolvent and placed into rehabilitation or liquidation, some or all of the recoverables due to these active Chubb companies from Century could become uncollectible. At December 31, 2017 and 2016, the aggregate reinsurance recoverables owed by Century to certain active Chubb companies were approximately $1.4 billion and $1.2 billion, respectively. Chubb believes the active company intercompany reinsurance recoverables, which relate to direct liabilities payable over many years, are not impaired. At both December 31, 2017 and 2016, Century's carried gross reserves (including reserves assumed from the active Chubb companies) were $2.0 billion. Should Century's loss reserves experience adverse development in the future and should Century be placed into rehabilitation or liquidation, the reinsurance recoverables due from Century to certain active Chubb companies would be payable only after the payment in full of certain expenses and liabilities, including administrative expenses and direct policy liabilities. Thus, the intercompany reinsurance recoverables would be at risk to the extent of the shortage of assets remaining to pay these recoverables.

Westchester Specialty impact of NICO contracts on Chubb’s run-off entities

As part of the Westchester Specialty acquisition in 1998, NICO provided a 75 percent pro-rata share of $1.0 billion of reinsurance protection on losses and loss adjustment expenses incurred on or before December 31, 1996, in excess of a retention of $721 million. At December 31, 2017, the remaining unused incurred limit under the Westchester NICO agreement was $409 million.